Can You Be Employed And Self Employed?

Is it possible to work as an employee at a company and also be self-employed running your own enterprise at the same time? While it may be very time consuming and challenging to fill both roles, it is indeed possible, and there are many ways to go about it. As many as two-fifths of the UK population have some sort of side income, and if they can do it, so can you!

Can you be employed and own a business?

Many people in the UK and around the world manage a full-time or part-time job alongside a business of their own, and it is becoming more and more common as people look for multiple income streams and additional ways to make extra cash from their free time.

However, you should read your current employment contract very carefully before starting a business of your own. There may be certain clauses that state that you are not allowed to start a side hustle while working for your current employers. The main reason for this would usually be a conflict of interest and the potential for your business to become competition for your employer’s business.

Employers often don’t like the idea of their employees starting businesses of their own as it could result in employees not putting as much effort into their jobs as they should be and arriving at work exhausted. There is also the risk of employees stealing clients for their new business venture, as well as using company secrets to their advantage.

If you’re unsure whether you are able to start your own business under your current employment contract, the best thing to do would be to speak to your head of HR. In what should be a confidential conversation, HR will be able to advise what you are able to do while working as an employee in your current job.

When starting a business, it’s a good idea to be honest, and upfront with your boss about it, even if you don’t legally have to based on your contract. Open communication is always best, and it will be better than your boss hearing it from you instead of anyone else. Your boss may be able to offer you valuable guidance and advice and support you in your business venture.

Suppose you’re in the position where you already own a business but are seeking employment to supplement your income. In that case, you’ll need to disclose the fact that you have a business when interviewing and submitting your CV. If your business currently takes up a large portion of your time, you may want to seek out a part-time job or a job with flexible working hours.

Because so many people are looking to start earning extra income, owning a business while also being employed is far more common than it used to be, and employers and colleagues are usually very accepting and accommodating of this.

Starting a business while being employed

People start businesses while still being self-employed for many different reasons. Their business may allow them to pursue their hobbies and passions, they may be starting a business with the long-term goal of eventually leaving their full time job, or they may simply need to supplement their income with different side hustles.

Whenever you start a business, whether currently employed or not, you need to register your business with the HMRC as a sole trader or a limited company. If you are a sole trader, you are self-employed and have full ownership over your business, while a limited company is a distinct company with a brand identity and can be controlled by more than one person. It is advisable to do some research into both of these options to determine which one is suited to you and your needs.

It is a legal requirement to inform the HMRC when you start making money from your business. This is so that you can process your Self Assessment tax return and other taxes correctly. No matter how much of a hobby you think your business is, you could end up in legal trouble if you fail to register your own business. Even if you are just cutting hair in your spare time for extra money, you could experience a sudden increase in popularity which could end up with the HMRC on your case.

The next step would be to sort out your business insurance and ensure that that’s taken care of to protect you and your assets in the case of any accidents or disasters. Side hustle ideas such as pet sitting or dog walking naturally have more risks involved than doing a home-based activity like graphic design.

We have dedicated an entire article to starting a business while you are employed, and you can read it here to find out more about this topic and gain knowledge about the steps involved in starting your own business.

Ways in which you can be self employed

While it is very easy to determine whether you are employed (it says so on your employment contract), self-employment can be a bit trickier to determine.

In the UK alone, there are currently 5 million self-employed people, all working for themselves and making money in various ways.

While you may not consider yourself a business owner, you are likely to be self-employed if:

• You are working as a freelancer
• You determine your working hours and how, when you work
• You work for a company on a non-contractual basis
• You hire other people to help you with your work
• Provide the equipment needed for you to do your work
• Charge a price for work done or sell products and services for a profit.

Basically, if you are making money by any means other than employment, your9 are most likely self-employed. And if you are self-employed, regardless of whether you are also employed or not, you will need to register as self-employed with the HMRC.

What happens if I am self employed and employed?

If you are employed and self-employed, you will need to manage your time wisely and be aware of your responsibilities and what is expected from you in both positions. It is your responsibility to research what you need to do in terms of registration and taxes in both positions.

The most important factor to note is that if your employment status is both self employed and employed, you will have to pay your tax through both Self Assessment and PAYE. When you are employed, the company you work for should handle your PAYE tax on your behalf.

When it comes to your own tax with self-employment, you will need to learn how to file your Self Assessment with HMRC. This can be a fairly confusing process, and you should seek out the assistance of a professional accountant if you find yourself unsure.

It is very important that as a self-employed person you stay on top of your taxes and Self Assessment requirements as having your taxes and finances in order could contribute immensely to your business success.

Be wary of applying for jobs that tell you that your title will be self-employed when the responsibilities are those of an employed person. These employers are often looking to take advantage of people and avoid paying tax, leaving you the responsibility of doing a Self Assessment when the company should be handling PAYE matters for you.

Being self-employed does not give you the right to slack off at your regular job. If anything, your performance at work will be closely analysed to ensure that you are still capable of carrying out your employment while starting your own business.

National insurance contributions when you are employed and self employed

When it comes to NIC (National Insurance Contribution), if you are both employed and self-employed, you will find yourself having to pay Class1 NIC on your employed income and Class 2 NIC and Class 4 NIC on your self-employed income.

If you are self-employed, you can also pay voluntary Class3 NIC. However, there are small earnings exemptions for self-employed people making less than a certain amount each year. Not paying NIC can be considered a serious offence, and you should prioritise paying this and ensuring that you pay the correct classes.

The advantages of being both self employed and employed

There are many advantages to being both employed and self-employed, and that is why so many people opt to go down this route. Some of the benefits of holding an employment and a self-employment include:

• Multiple streams of income – doing both could double or even triple your monthly income
• Back up plan if either your job or business fails
• You can explore your passion through self-employment, such as art, design, gardening etc, while still maintaining your main job in a corporate environment
• Learn about the pros and cons of employment and self-employment simultaneously and realise which one is better for you in the long run
• Start a business without the risk of not receiving an income for the first few months, as businesses often take a while before they start making money
• Use what you have learnt about business in your full time employment, and use it in your own business
• You’ll have more capital for your business venture
• There won’t be as much pressure for your business venture to succeed as there would be if you did not maintain a day job

Starting a business while still being employed is a great way for you to learn about being a business owner without as many risks of those leaving their jobs to pursue self-employment. Starting a business while you still have a job may allow you to retire from your job sooner if your business begins to do well and have the ability to provide you with passive income. You get the best of both worlds.

Maintaining a work-life balance while being employed and self employed

While there are many advantages to being both employed and self-employed at the same time, there are also many challenges involved in this situation, and it can get exhausting very quickly. The last thing you want to do is start falling asleep at your job because you’ve been working on your business all night long.

One of the major challenges that come along with being both employed and self-employed is maintaining a healthy work-life and personal life balance. If you are working a traditional nine to five job and then spending the evenings and weekends working on your own business venture, you may find yourself feeling burnt out with little time to spend with family and friends, and tending to household chores, enjoying hobbies etc. Work will become your life.

While making money and pursuing success may be your priority right now, it is very important that your work life does not take over your entire life. Stress and long working hours can lead to various illnesses, and your work/personal life balance should be an important factor in your life.

You can maintain a healthy work/life balance by dedicating time slots to certain tasks and setting boundaries when it comes to your self-employed work.

If your business starts to get very busy, you may want to consider hiring someone to help you or speaking to your boss about reducing your working hours at your job. Remember to ask for help when you need it. There is no use investing time and energy into being employed and self-employed if it’s going to take over your entire life.

Are you ready to start a business venture while maintaining your job?

These are some of the signs that indicate that you may be in a position to handle being self-employed and employed:

• Your job allows for flexible working hours
• You have a great business plan in mind
• You know the responsibilities involved with being self-employed
• You do not have very many demands outside of work
• You find yourself with time to spare in the evenings and on weekends

In order to ensure that your taxes, finances and National Insurance Contributions are all above board as a person that is both employed and self-employed, we recommend speaking to a professional accountant or financial advisor.